Safeguard Duties on China Tires Set to Expire Sept 25
This is a reminder that the additional duties on certain passenger vehicle and light truck tires from China, imposed for a three-year period as a Section 421 safeguard, are set to expire on September 25, 2012. Under the current statute, the President may extend the safeguard measures until December 2013, following an investigation by the International Trade Commission initiated on the basis of a request by the President (the statute also allows for initiation on the basis of an industry petition, but sources at ITC said that no petition was filed before the statutory deadline). According to sources at ITC, the President has not requested extension of the measure to date.
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(In 2009, President Obama determined to impose additional duties on imports of certain passenger vehicle and light truck tires from China for a three-year period under Section 421 of the 1974 Trade Act, following a determination by the ITC that an increase in such imports from China, in both absolute and relative terms, materially injured domestic industry. This included additional 35% ad valorem duties for the first year, 30% additional duties in the second year, and 25% in the third year. This action was the first Section 4211 import relief to be implemented. China subsequently challenged the safeguards at the WTO, where a Panel and Appellate Body subsequently found in favor of the U.S. See ITT’s Online Archives 09091410 for summary of imposition of Section 421 safeguards, and 11090621 for summary of WTO Appellate Body finding.)
Extension Until 2013 Possible if Requested & ITC Agreement
The statue governing section 421 measures, 19 USC 2451, says the safeguards can be extended by the President following an affirmative determination from the ITC in an investigation on extension of the measure, initiated on the basis of: (1) a petition on behalf of the industry concerned, filed with the International Trade Commission from 6 to 9 months before the expiration date of relief; or (2) a request from the President. According to sources at ITC, no domestic industry petition has been filed (and the deadline for filing has passed), and no Presidential request has been made to date.
Industry has not petitioned for extension; deadline for filing has passed. Sources at ITC said that no industry petition for extension has been filed, and the window for the petitions has ended (i.e., it expired 6 months before the end date of the measure, or about March 25, 2012).
President has not yet requested an extension, ITC agreement also required. The measure may be extended if the Presidential makes a request and the ITC affirmatively agrees after conducting an investigation, but sources at ITC said no such request has been made to date. No explicit time limit is provided by the statute for such a request, but the ITC's determination on extension of the measure must be transmitted by 60 days before termination of the measure, following completion of an investigation that includes a hearing where interested parties must be allowed to comment.
Any extension only available until December 2013. Even if extended, the measure on tires can only be in effect until December 2013. According to the statute, Section 421 measures may only be applied for a 12-year period following the date of entry into force of the Protocol of Accession of the People’s Republic of China to the WTO, i.e. until December 11, 2013.
If U.S. Extends, China Can Retaliate Under WTO Protocol of Accession
Furthermore, should the U.S. extend the measures against Chinese tires, China would have the right to retaliate against the U.S. The Protocol on the Accession of the People’s Republic of China to the WTO says that, if a Section 421 measure is imposed as a result of an absolute increase in imports (as is the case with the measure on tires from China), China has a right to suspend the application of substantially equivalent concessions or obligations under the GATT 1994 to the trade of the WTO member applying the measure, if such measure remains in effect for more than three years.
1Section 421 investigations are a transitional safeguard tool to address import surges of Chinese products that cause or threaten market disruption. The procedure was negotiated as part of China's accession to the WTO, and is in effect until December 11, 2013. Section 421 safeguards can be used to provide relief against any type of import from China, including textiles and apparel.